What is achievable by Eu reforms, what gets lost in case of Brexit

Debate at the Ditchley Foundation The UK and the EU: redefining the relationship or heading for the exit?

Chair: The Rt Hon Baroness Ashton of Upholland GCMG

The outcome of the British General Election has confirmed that there will be a referendum in 2017, or quite possibly sooner, on whether the UK should stay in the EU or leave. The Prime Minister’s avowed aim is to negotiate with his European colleagues an agreed package of reforms to the EU itself, and to the UK’s place in it, which will enable him to recommend to the British people that we should stay in. For the moment, what the UK will be asking for is known only in outline and it is therefore hard to assess the chances of negotiating success. In any event, the new government face a very tricky balancing act between the demands of some in the UK, including some Conservative backbenchers, for fundamental change, and repatriation of significant powers; and the reluctance of most other governments in Europe to contemplate major concessions just to keep the UK in, not least given the virtual impossibility of significant treaty change on any relevant timescale.

The background is that most, if not all, other EU members would like to see the UK stay, for a variety of reasons, including the risk to the whole enterprise if a major member leaves. The Germans in particular would be sorry to see the UK go, as an ally on issues such as free trade. At the same time, levels of frustration with the UK are higher than they have ever been, and the UK is seen as having already marginalised itself in many areas. Many partners are therefore unlikely to want to pay much of a price to retain the UK, and may be allergic to being seen to act under threat from London, or to giving the UK special treatment which others may well then demand. Changes to fundamental principles of the EU such as freedom of movement look virtually impossible. Movement in areas like benefits for those moving from other EU countries, and single market protection, looks more feasible, and changes such as liberalisation of services, greater commitment to subsidiarity, less Commission activism, and a larger role for national parliaments should be able to attract support from elsewhere in Europe.

Such a package, if accompanied by warm language about further reform, might enable the Prime Minister to claim success. However, it would fall far short of what some British eurosceptics are looking for. They are calling on the Prime Minister to use his new mandate to be tough, and are already suspicious that the Prime Minister might try to repeat the ‘trick’ of Harold Wilson in 1975, by selling a relatively small package of change to the British people as a major negotiating achievement. Some eurosceptics would not of course be satisfied with any package as their aim is simply to leave. Whatever the negotiated package, there will inevitably be divisions inside the Conservative party during the referendum campaign. Of the other main parties, Labour is likely to argue for staying, but with a vocal minority against; the Liberal Democrats and Greens will be in favour of the status quo, as will the Scottish National Party; UKIP will be against. Business is likely on the whole to be in favour of staying, depending on the nature of the package negotiated by the Prime Minister, as are the trade unions, but a significant part of the written press may well be arguing to leave. The current opinion polls suggest that the British people would vote in favour of staying if there were a referendum now, but polling results in this area have varied widely at different times, and the result of the actual referendum is impossible to predict at this stage.

There is also a clear potential link between the result of the EU referendum and the future of Scotland within the UK. The Scottish Nationalists are arguing that all parts of the UK have to vote for leaving before the result can be valid. If this demand is not accepted, as is almost certain, and if Scotland votes in favour of staying while the overall vote is to leave, this could fuel the Scottish independence campaign.

Overall, the stakes could hardly be higher, and the issue is likely to dominate British political life for the coming period, even if public opinion is not highly engaged for now. This conference will aim to bring together all sides of the argument, and key players from outside, to look dispassionately at the prospects and if possible to make recommendations on the negotiations and the conduct of the future referendum campaign.

Major changes to EU treaties or to the relationship EU-UK are not easy to achieve in the time available.

Attitudes of EU M.S. on Brexit are, so far, according to the declarations, in favour of UK to stay in.

But this happens because it is not yet clear the proposed package nor, consequentially, the price that EU M.S. should pay for keeping UK in.

A) Here, two factors have to be considered:
1) the approach by UK to the negotiations: a cooperative and positively oriented one would orientate M.S. to a stronger support, while a take or leave approach would make a number of M.S. – and I think my country too – to a much more rigid position.

How can we explain to taxpayers that we have to obey to many apparently excessive but necessary common rules, while a country, more “special” than others, is given the right to be out of this or that legislative framework because its leader is pretending so?

2) The second factor is the evaluation of the costs of the demanded reforms or opts out for the other M.S.

So, if package would resolve in a generally beneficial reduction of EU red tapes, I wouldn’t see problems. But if a given financial burden now shared also by UK would be transferred on the shoulders of the others, the recent memory of what happens with Greece and before with other M.S. would made much more reluctant many M.S.

B) Migration/refugees crisis is another factor influencing many M.S. positions. Again, we couldn’t sell to those public opinions and Parliaments that will have finally to ratify the package, the principle that UK is allowed for a closed doors policy while the others have been and will be in a tough way discussing on burden sharing and quotas?

None of the national GVTs would like, in that way, to feed populistic and xenophobic parties that are gaining ground everywhere!

C) I cannot indicate one key player country in EU; I think the most interested to keep EU united are the communitarian institutions, COMMISSION and PARLIAMENT.

Their credibility would be completely undermined if one or more key players countries should emerge as the privileged interlocutors on the negotiations process.

On non EU countries we already know that US, Japan, Australia, while of course referring to the “right of British voters to decide”, voiced their wishes for UK staying in.

In my view, for instance, the high interest of US to negotiate TTIP would be affected by GREXIT, as well as the traditionally strong security transatlantic ties, where a guarantee for US couldn’t be represented only by the Baltics or by Poland.

On the trade and business interest, I think that UK, from outside EU, couldn’t in any case retain the advantages of single market or the position of the City of London.

So, global players like India and China’s interests should be to keep that UK special position since it is one the major assets for making trade and business through UK.

The fact of having, within the EU membership, a country like UK looking in some areas more at the intergovernmental way of deciding, is seen as a possibility somehow to speed up procedures and facilitate results from those global players (China, India, US) that play always very pragmatic games.

29-31 October 2015

The director of the Ditchley Foundation John Holmes, Franco Frattini and former EU HR Catherine Ashton

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